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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended: December 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 000-26479
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Wolfpack Corporation
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(Exact name of small business issuer as
specified in its charter)
Delaware 56-2086188
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
17 Glenwood Avenue, Raleigh, North Carolina 27603
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (919) 831-1351
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Securities registered under Section 12(b) of the Act: None
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Securities registered under Section 12(g) of the Act: Common Stock, par value
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$.001 per share
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
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No _____
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [_]
State issuer's revenues for its most recent fiscal year: $652,385
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As of April 12, 2000, there were 5,311,400 shares of the registrant's
common stock, par value $0.001 issued and outstanding. Of these 2,156,400
shares are held by non-affiliates of the registrant. The registrant's common
stock has never traded on any public market. The market value of securities
held by non-affiliates is $323,460 based on an assumed market value per share of
$0.15 based on the most recent sale price per share of the registrant's common
stock on October 15, 1999.
Transitional Small Business Disclosure Format (check one):
Yes______; No X
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DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933, as amended ("Securities
Act") -- N/A.
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TABLE OF CONTENTS
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Item Number and Caption Page
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Special Note Regarding Forward-Looking Statements...................................... 4
PART I
1. Description of Business................................................................ 4
2. Description of Property................................................................ 16
3. Legal Proceedings...................................................................... 16
4. Submission of Matters to a Vote of Security Holders.................................... 16
PART II
5. Market for Common Equity and Related Stockholder Matters................................ 17
6. Management's Discussion and Analysis of Financial Condition and Results of Operations... 19
7. Financial Statements.................................................................... 25
8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.... 25
PART III
9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...................................... 26
10. Executive Compensation................................................................. 27
11. Security Ownership of Certain Beneficial Owners and Management......................... 28
12. Certain Relationships and Related Transactions......................................... 29
13. Exhibits and Reports on Form 8-K....................................................... 30
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Annual Report on
Form 10-KSB for the year ended December 31, 1999 discusses financial
projections, information or expectations about the products or markets of
the Company (as defined herein), or otherwise makes statements about future
events, such statements are forward-looking. The Company is making these
forward-looking statements in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although the Company
believes that the expectations reflected in these forward-looking
statements are based on reasonable assumptions, there are a number of risks
and uncertainties that could cause actual results to differ materially from
such forward-looking statements. These risks and uncertainties are
described, among other places in this Annual Report, in "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Risk Factors" commencing on page 22.
In addition, the Company disclaims any obligations to update any
forward-looking statements to reflect events or circumstances after the
date of this Annual Report. When considering such forward-looking
statements, readers should keep in mind the risks referenced above and the
other cautionary statements in this Annual Report.
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PART I DESCRIPTION OF BUSINESS
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Item 1. Description of Business.
(a) Business Development.
Wolfpack Corporation, a Delaware corporation (the "Company"), was
formed on March 16, 1998 to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law
("DGCL"). On May 14, 1998, the Company formed Wolfpack Subsidiary Corp., a
Delaware corporation and a wholly-owned subsidiary of the Company (the
"Subsidiary"), in order to effectuate and complete acquisitions of AAM
Investment Council, Inc. ("AAM") and Dina Porter, Inc. ("Dina Porter").
(Unless expressly stated otherwise, all references to the Company
hereinafter shall be deemed to include the Subsidiary. The acquisition of
AAM hereinafter shall be referred to as the "AAM Acquisition" and the
acquisition of Dina Porter hereinafter shall be referred to as the "Dina
Porter Acquisition." Together the AAM Acquisition and the Dina Porter
acquisition hereinafter shall be referred to as the "Acquisitions").
On January 4, 1999, the Company and the Subsidiary entered into two
acquisition agreements, one with AAM (the "AAM Acquisition Agreement") and
the other with Dina Porter (the "Dina Porter Acquisition Agreement")
(collectively the "Acquisition
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Agreements"). Under the terms of the Acquisition Agreements, the Company
(i) acquired all of the issued and outstanding stock of AAM from the AAM
shareholders in exchange for 1,000,000 shares of the Common Stock of the
Company, and (ii) acquired all of the issued and outstanding shares of
stock of Dina Porter from the Dina Porter shareholders in exchange for
1,000,000 shares of the Company's common stock, par value $.001(the "Common
Stock"). The shares of Common Stock issued to the shareholders of AAM and
Dina Porter were issued pursuant to an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2). As a result of
the Acquisition, AAM, which was formed under Pennsylvania law on February
15, 1990, and Dina Porter, which was formed under North Carolina law on May
8, 1998 became the wholly-owned subsidiaries of the Company.
(b) Business of the Company.
(1) Principal Products or Services and their Markets.
(i) The Company.
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The Company is a holding company, the principal assets of which
consist of the capital stock of each of AAM and Dina Porter. The Company
conducts no business on its own independent of AAM and Dina Porter. For
financial information on the operations of the Company's lines of business,
see the Combined and Consolidated Financial Statements commencing on page
F-1 and the notes thereto.
(ii) AAM
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The business in which AAM engages is the provision of investment
advisory services. AAM currently has no active clients but it is presently
in discussions with four (4) prospective clients. Management has devoted
the majority of its efforts to (i) developing its marketing philosophy and
market strategy, (ii) obtaining new clients, (iii) pursuing and assembling
a management team to complete its marketing goals, and (iv) obtaining
sufficient working capital through loans and equity through private
placement offerings. These activities have been funded by the Company's
management and investments from stockholders. Among the services that AAM
has offered since its formation by management in 1990 has been portfolio
management designed to achieve unique investment objectives. AAM seeks to
act as a financial adviser to select companies in order to: (i) provide
financial advice and consulting on an everyday basis according to a
company's needs; (ii) analyze certain historical and pro forma financial
information pertaining to the operation of a company; (iii) perform due
diligence on a company, its industry, markets and operations as well as on
the principals involved to the extent that AAM deems prudent; (iv) assist
in the preparation of financial pro formas or other presentation documents
to the extent requested by a client to assist in the structuring,
negotiation, documentation and placement of financing; (v) use its best
efforts to identify and contact qualified private, institutional and
industry investors or their representatives regarding the financing and to
make introductions regarding the same; (vi) under the direction of a
client, advise and assist in the negotiations
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and structuring of such financing with potential investors; and (vii)
assist in the closing of the financing with the potential investors. At the
current time, AAM does not have the resources or personnel to assist a
client in a large financial transaction. AAM does have the capabilities of
assisting with structuring, negotiation, preparation of documentation, and
placement of financing of a small to medium-size equity, debt or sub-debt
raise in the range of one million dollars to thirty million dollars.
AAM can service any size investment advisory client as long as such
client has no more than ten portfolios. The ideal client of AAM has one to
three portfolios and clearly defined investment objectives.
The criteria that AAM looks for in selecting a client are those listed
above and reiterated below:
1. A small to medium-size client.
2. A client looking for financial consulting assistance on a small
to medium-size transaction. (Debt, equity or sub-debt raise)
3. A small company that needs "start-up" financial consulting
assistance.
4. An investment advisory client that has or is willing to create
clearly defined investment objectives.
5. An investment advisory client with one to three portfolios.
Market for AAM's Services
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The market for AAM and the kind of companies that will engage the
services of AAM are the "start-up" and the small to medium-size company.
They do not have to be in a specific industry, but they need to require
financial consulting services such as:
1. Provide financial advice and consulting on an everyday basis
according to a company's needs.
2. Analyze certain historical and pro forma financial information
pertaining to the operation of a company.
3. Perform due diligence on a company, its industry, markets and
operations as well as on the principals involved.
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4. Assist in the preparation of financial pro formas or other
presentation documents to the extent requested by a client to
assist in the structuring, negotiation, documentation and for the
offering.
5. Use its best efforts to identify and qualify private,
institutional and industry investors or their representatives
regarding the financing and to make introductions regarding same.
6. Under the direction of the client, advise and assist in the
negotiations and structuring of such financing with potential
investors.
7. Assist in the closing of the financing with the potential
investors.
In the investment advisory business, AAM's potential clients will be
high net worth individuals, small companies or institutional investors.
AAM's relationship with a client that needs financial advisory
services with a specific transaction would generally last about three or
four months, and AAM would get a specific fee only for completing the
transaction. Usually, 1% of the total transaction for raising debt, 3% of
the total transaction for raising sub-debt, and 5% of the total transaction
for raising equity.
For an investment advisory client that wants a specific portfolio
structured and managed, AAM would charge fees to that client as follows:
1/4 of 1% of the total assets per year for a debt portfolio, billed
quarterly, or 3/4 of 1% of the total assets per year for an equity
portfolio, billed quarterly. The investment advisory client could stay
with AAM for a period as short as six months or indefinitely, depending on
the client's objective. The term "portfolio" refers to the combined holding
of more than one stock, bond, commodity, real estate investment, cash
equivalent, or other assets by an investor.
AAM's Marketing Strategy
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Most of AAM's marketing will be done by word of mouth. Advertising is
not a very effective way to obtain business as it is expensive (over time)
and it can only be done on a small regional basis unless a great deal of
money is expended. Therefore, there will only be a small amount of
targeted advertising done. AAM's marketing will take place with accounting
and legal firms. These are the most likely types of professionals that
would refer business of the size and type that would be appropriate for
AAM. Establishing contacts with these firms would be accomplished first.
This would be done with breakfast or lunch meetings first with the partners
of legal and accounting firms and then meetings with other members of the
firm.
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Financial consultants and other professional consultants would be the
second leg of a marketing program. Again, most of this would be
accomplished in one-on-one or small group meetings. Over time, this type
of marketing should build confidence and increase their comfort factor to
the point of recommending AAM to their clients.
Expansion of AAM
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Mr. Coker is the sole employee of AAM and at the moment is integral to
AAM's success. However, AAM is going to devote considerable time and
efforts to recruiting highly-skilled and experienced individuals. Once
recruited, AAM will compensate such individuals and provide incentives to
encourage them to remain with AAM. AAM intends to hire one person within
the next six (6) months at a yearly salary of approximately $75,000.
Thereafter, AAM will evaluate its needs for additional personnel and hire
such personnel accordingly.
To date, AAM's investment advisory services have been limited. AAM is
not registered with the Securities and Exchange Commission (the "SEC") as
an investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act") due to the exemption from such registration for
investment advisers who have fewer than 15 clients in a twelve month
period. The Company intends to expand AAM's investment advisory business
and will register as an investment adviser under the Advisers Act, when it
is required to do so.
(ii) Dina Porter
The business in which Dina Porter engages is the operation of a retail
store which specializes in contemporary clothing, jewelry and fine crafts.
Dina Porter specializes in contemporary clothing for women ranging from
sizes XS to 3X and in fine gifts. Dina Porter carries clothing, gifts and
crafts that are "Made in America". The clothing is unconstructed, offering
maximum comfort, and is easy to care for, while using top fabrics such as
linen, silk and chiffon. Dina Porter carries casual to wedding attire and
certain lines can be custom ordered. Dina Porter carries over 100 lines of
clothing, but only carries two or three items per style.
The term "contemporary" refers to more modern in character as opposed
to early American, traditional, or other older styles. Since all the
craftsmen and clothing designers of the products that Dina Porter carries
are living, their work represents newer looks in the art and crafts world.
The work is simpler, less cluttered - all represented by the word
"contemporary."
The term "fine," with respect to "fine crafts and clothing" refers to
a better quality of workmanship and style. Since pieces are made in
America by contemporary craftsmen and designers, using limited edition
materials, the work is more refined than found where
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price is a greater issue than quality. Fine also refers to a refined
quality - exceptional, not commonplace.
The term "unconstructed" is a term in the clothing industry that
refers to clothing which is not highly defined in size. Unconstructed
clothing is generally sized as small/medium and medium/large instead of
size 6, 10, 12 or 18 etc. Since there are usually no definite seams or
waistbands to limit the wearer to a specific size, more than one size or
shape woman can wear the same garment. For example, shoulder seams do not
fall exactly on the shoulder, but drop; waistbands are elastic, and hems
tend to be much longer than on clothing that is more traditional. Comfort
is as important as the look of the clothing.
In addition to clothing, Dina Porter carries a wide selection of
accessories including scarves, hats, purses and limited edition jewelry.
The scarves that Dina Porter carries are usually one-of-a-kind, hand
painted silk. The jewelry carried consists of gold, silver, metal and
modern art pieces. For fine gifts, Dina Porter offers table pieces of hand
blown glass, clocks, hand-thrown pottery, perfume bottles, picture frames
and kaleidoscopes. Dina Porter does carry one line of gifts that is an
exception to the "Made in America" rule. That line is Halcyon Days, the
English Battersea Boxes that are considered to be highly desirable as
collectibles. Halcyon Days handmade enamel boxes are imported from Great
Britain. The manufacturer of the boxes was founded during the reign of
Queen Victoria, and is located in Bilston, England. Each box is made of
copper, covered in enamel, and then hand painted. The boxes are carried by
some of the most prestigious retailers in the USA including Tiffany's,
Neiman Marcus, Gumps, and Scully and Scully. Many of their editions are
limited, and collectors seek outdated boxes as well as the year boxes
(e.g., Mother's Day 1999, Valentine's Day 1999). Dina Porter provides a
unique service by customizing the inside of these boxes.
The market for Dina Porter is the upscale customer (primarily female)
living in Raleigh, Chapel Hill, and Durham, North Carolina area (i.e., the
Research Triangle) and also the tourists who come to the capital city of
Raleigh. The upscale customer, a person who has more disposable income
than the average consumer, is our target market: since our clothing and
crafts are handmade in America and thus not produced abroad for pennies on
the dollar, the cost is greater and thus the end market for these goods is
more limited. Upscale customers are more easily able to afford both this
clothing and American crafts which are more expensive to produce than
visually comparable items that are imported from third world countries and
the Far East where labor costs are so much less. The clothing and fine
crafts carried by Dina Porter are not usually available to other stores in
the area, as the suppliers are smaller, more "mom and pop" vendors rather
than large manufacturers. Thus, the customers who come to the store
appreciate the fact that the items offered are not readily available
elsewhere in the area. In addition, Dina Porter is focusing on increasing
its sales through the Internet by way of its eleven (11) page web site.
There are definite seasonal effects on sales due to the nature of the
retail business. However, the mixture of hard goods (i.e., crafts) and soft
goods (clothing) help minimize any downturn in economic cycles experienced
by stores having only one or the other type of
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goods. For example, Christmas is not a peak season for clothing, whereas
September through mid-November are, but by late November the hard goods
pick up and help outweigh any downswings found in the clothing industry.
Usually the worst two months of the year for retail sales are January and
July, but that is typical throughout the retail industry.
Susan H. Coker is the founder and full time employee of Dina Porter.
She does the buying, ordering and is responsible for the daily operations.
Her other employees often assist in the buying and focus on the selling
part of the store, i.e., the customer contact.
Dina Porter has conducted this line of business since its inception by
Susan H. Coker in 1983 as a Pennsylvania sole proprietorship, in 1995 as a
North Carolina sole proprietorship and as a North Carolina corporation in
1998. The Company plans to build Dina Porter's retail merchandising
business by opening additional stores in the same geographic area and in
other locations in North Carolina. Dina Porter intends to open an
additional location in Chapel Hill, North Carolina within the next twelve
(12) months, in a retail space of approximately 2,000 square feet. After
opening the second location, Dina Porter and the Company will evaluate the
possibility of opening additional branches in other parts of North
Carolina. Dina Porter intends to pay no more than $20.00 per square foot
and estimates that one time set-up costs will be approximately $25,000.
(2) Distribution Methods of the Products or Services.
Prior to the AAM Acquisition, AAM's investment advisory services have
been limited. AAM targeted only select clients via word of mouth and had
fewer than 15 clients in a twelve month period. The Company intends to
focus its efforts on enlarging its client base. Until recently, AAM has had
a few clients every year. The optimum number of clients in the past has
been three (3) to four (4) clients a year. Prior to the Dina Porter
Acquisition, former management relied on local and Internet advertising, as
well as "word of mouth". The Company seeks to expand the business of AAM
and Dina Porter by increasing sales and marketing efforts to attain
significant penetration into targeted areas.
Dina Porter is constantly working on increasing sales in many
directions. Their advertising budget increases yearly, and Susan Coker
stresses the importance of customer retention with the sales staff. In the
Spring of 1999, several in-house fashion shows were held, with a percentage
of proceeds going to the charitable group that sponsored the show. These
proved very successful and Dina Porter plans to continue them in the
future. The web site is another way to expand, and Dina Porter will be one
of two key retailers mentioned on Citysearch's retail page over the ten
week period during the Fall/Winter 1999-2000 season. Dina Porter's semi-
annual newsletter is mailed to over a 3,000 customer base and reminds
customers of what is current in both fashion and crafts.
The web site for Dina Porter is maintained by Susan H. Coker and her
staff, in addition to backup provided by Citysearch. Due to the limited
amount of any of the crafts and clothing sold by Dina Porter, it is not
possible or practicable to display the products or post the prices on the
website, since the product may not be available at the time the web site
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is viewed. The photos of the products that are displayed on the website are
representative of the products Dina Porter carries. The Website invites
viewers to visit, telephone, or e-mail Dina Porter with inquiries.
Once a customer contacts Dina Porter via e-mail (which is contained in
the website) or by the "800" toll free number, the staff at Dina Porter
discuss the customer's needs. Dina Porter will then e-mail photographs of
the current products in stock to the customer. If Dina Porter has what the
customer wants, the merchandise is shipped directly to the customer via UPS
(Dina Porter maintains an account with UPS, which comes twice daily). Dina
Porter has purchased a digital camera in order to photograph merchandise
and e-mail it to a customer for viewing.
As most aspects of AAM's business will be dependent on highly skilled
and experienced individuals, AAM will devote considerable efforts to
recruiting and compensating such individuals and to providing incentives to
encourage them to remain with AAM. Further, approximately sixteen and one-
half (16.5%) percent of the proceeds derived from the March 26, 1999
limited offering of the Company's common stock (the "Offering") have been
targeted for sales and marketing efforts and approximately fifty-eight
(58%) percent of the $271,500 raised by the Offering have been targeted for
the acquisition and expansion of AAM and Dina Porter.
(3) Status of any publicly announced new product or service.
There have been no publicly announced new products or services by the
Company, AAM or Dina Porter.
(4) Competitive Business Conditions and the Company's Competitive Position
in the Industry and Methods of Competition.
(i) The Company.
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The Company is not aware of any competition that it may have from
other holding companies. However, AAM and Dina Porter do have significant
competition in their respective industries.
(ii) AAM.
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AAM will encounter intense competition in all aspects of its business
and will compete directly with many full service securities firms, a
significant number of which (x) offer their customers a broader range of
financial services including investment advisory services, (y) have
substantially greater resources and (z) may have greater operating
efficiencies. In addition, a number of firms offer investment advisory
services which are incidental to their other services and do not charge any
commission for this type of service.
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Moreover, there is substantial commission discounting by full-service
broker-dealers competing for institutional and individual brokerage
business. The possible increase of this discounting could adversely affect
AAM.
Other financial institutions, notably commercial banks and savings and
loan associations, offer customers some of the services and products
presently provided by investment advisers and securities firms. In
addition, certain large corporations and banks have entered the securities
industry by acquiring securities firms, which offer investment advice.
While it is not possible to predict the type and extent of competitive
services which banks and other institutions ultimately may offer to
customers, AAM may be adversely affected to the extent those services are
offered on a large scale.
(iii) Dina Porter.
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The specialty retail industry is highly competitive and fragmented.
Specialty retail means that the products offered are not available in lower
to mid-end department stores or from mass merchandisers. The clothing and
craft suppliers are usually smaller and create fewer products to sell at a
higher price. This duality of a more limited quantity and higher price
attracts the customer who prefers a more exclusive look and is willing to
pay for the exclusivity. Dina Porter competes with large specialty
retailers, traditional and better department stores, national apparel
chains, designer boutiques, individual specialty apparel stores and direct
marketing firms. Dina Porter competes for customers principally on the
basis of quality, assortment and presentation of merchandise, customer
service, store ambience, sales and marketing programs and value. Dina
Porter competes for quality merchandise and assortment principally based on
relationships with designer resources and purchasing power. Most of Dina
Porter's competitors are larger and have greater financial resources than
the Company. Certain of Dina Porter's merchandise resources have
established competing free-standing retail stores in the same vicinity as
Dina Porter.
(5) Sources and Availability of Raw Materials and the Names of Principal
Suppliers.
None of the Company, AAM nor Dina Porter utilizes raw materials in its
respective business. The closest comparison to the utilization of raw
materials is the reliance by Dina Porter on designers of quality and
fashionable merchandise. The Company has no guaranteed supply arrangements
with its principal merchandising sources. The Company's success is
dependent in part upon initiating and maintaining strong relationships with
designers and that such designers will continue to meet Dina Porter's
quality, style and volume requirements.
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(6) Dependence on one or a few major customers.
Neither the Company nor Dina Porter depends on one or a few major
customers. AAM, historically, has targeted only selected companies and has
had fewer than 15 clients in any twelve month period. Currently, AAM is in
discussions with four (4) potential clients. The loss of any client could
have a material adverse effect on its business. However, the Company has
targeted the build-up of the AAM client base as part of its business plan.
(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration.
None.
(8) Need for any Government Approval of Principal Products or Services.
(i) The Company.
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The Company is a holding company and does not need any Government
approval of any principal products or services. It may be noted that
effectiveness of this Form 10-SB, clearance of all comments on the Form 10-
SB by the Securities and Exchange Commission and approval of Form 211 as
filed with the NASD are prerequisites of the Company's common stock being
quoted on the National Association of Securities Dealers Over The Counter
Bulletin Board (the "Bulletin Board").
(ii) AAM
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AAM is not presently awaiting any governmental approval for its
services. Note that AAM is not registered with the SEC as an investment
adviser under the Advisers Act due to the exemption from such registration
for investment advisers who have fewer than 15 clients in a twelve month
period. The Company intends to expand AAM's investment advisory business
and will register as an investment adviser under the Advisers Act, when it
is required to do so.
Assuming that a determination is made that AAM is no longer exempt
from registration under the Advisers Act, it will be required to register
with the SEC and/or potentially with the state in which it is located or
intends to conduct business. Jurisdiction over investment advisers is
allocated between the states and the federal government based generally
upon the amount of assets the investment advisor has under management.
Benefits to a client of an investment advisor registering under the
Advisers Act include the receipt of certain current audited financial
information and other non-financial information. As a public reporting
company, AAM already will be preparing audited financial statements and
providing non-financial disclosure to the investing public.
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Therefore, AAM does not view the preparation and updating of the Form ADV
to be an onerous responsibility.
There is no requirement for investment advisers to pass any
examination or to meet any qualification requirements based on training.
However, all investment advisers are subject to restrictions against
engaging in fraudulent, deceptive or manipulative acts or practices and
such activities could result in the adviser being barred from registration
or being subject to remedial sanctions after registration. To register, AAM
would file a Form ADV in triplicate and submit with it a registration fee
of approximately $150. As AAM would probably request the assistance of an
attorney to complete this filing on its behalf, AAM anticipates incurring
several hundred dollars in attorney's fees.
Form ADV consists of a two part application which provides the SEC
with information regarding the educational and business background and the
business practices of the investment adviser and of those who control the
investment adviser. An investment adviser must include an audited balance
sheet with Form ADV where it (i) retains custody of client funds or
securities or (ii) requires prepayment of advisory fees six months or more
in advance and in excess of $500 per client.
Within 45 days after Form ADV is filed, the SEC should grant
registration or begin proceedings to deny the registration. Grounds for
denial are where the SEC finds that the investment adviser has committed
prohibited acts and, therefore, denial is in the public interest.
In order for the investment adviser to remain in good standing, the
Advisor's Act requires the investment adviser, among other things, to:
1. keep Form ADV current by filing periodic amendments whenever any
information previously reported becomes inaccurate;
2. file a brief report on Form ADV-S within 90 days of the end of
each fiscal year (along with an audited balance sheet when
applicable); and
3. comply with the "brochure rule" which requires most investment
advisers to provide clients and prospective clients with
information about the investment adviser's business practices and
educational and business background. Part II of Form ADV can be
used for this purpose.
As previously stated, all investment advisers are subject to
restrictions against engaging in fraudulent, deceptive or manipulative acts
or practices. Registered investment advisers are subject to remedial
sanctions including censure, limitations on their operations, suspension
for a period not exceeding 12 months, and revocation for, among other
things,
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willfully violating or aiding or abetting a violation of the Securities Act
of 1933, the Securities Exchange Act of 1934, the Investment Company Act of
1940 or the Advisers Act.
(iii) Dina Porter
-----------
Dina Porter does not need any Government approval of any principal
products or services. It may be noted that a facility's operating costs
are affected by increases in the minimum hourly wage, unemployment tax
rates, sales taxes and similar costs over which the Company has no control.
Some of Dina Porter's personnel may be paid at rates based on the federal
minimum wage. As a result, increases in the minimum wage may result in an
increase in Dina Porter's as well as in the Company's labor costs.
(9) Effect of Existing or Probable Governmental Regulations on the
Business.
The business of AAM, the investment advisory industry and securities
industry generally, are subject to extensive regulation at both the federal
and state levels. Failure to comply with any of these laws, rules or
regulations could result in fines, suspension or expulsion, which could
have a material adverse effect upon AAM as well as the Company. As
previously stated, increases in the minimum wage may result in an increase
in the Dina Porter's as well as the Company's labor costs.
(10) Estimate of the amount spent during each of the last two fiscal years
on research and development activities, and the extent to which the
cost of such activities are borne directly by customers.
Since the Company's inception in 1998, the Company has incurred no
research and development expense. Neither Dina Porter nor AAM has incurred
corporate research and development expense since the Company's acquisition
of them in January 1999. It may be noted that AAM incurs certain research
expenses as a part of conducting its investment advisory services and
passes these expenses along to its client. However, this type of daily
activity is part of the very foundation of the service which AAM provides
and should be differentiated from the research and development expenses
incurred in overall technology or product development.
(11) Costs and effects of compliance with environmental laws (federal,
state and local).
None of the Company, AAM nor Dina Porter is impacted directly by the
costs and effects of compliance with environmental laws.
(12) Number of total employees and number of full time employees.
15
<PAGE>
As of the date of this filing, the Company had no full-time employees.
As of the date of this filing, AAM had one (1) full-time employee and Dina
Porter had nine (9) employees, two (2) of whom are full-time and seven (7)
of which are part-time.
- --------------------------------------------------------------------------------
ITEM 2. DESCRIPTION OF PROPERTY
- --------------------------------------------------------------------------------
The Company, the Subsidiary and AAM maintain their executive and
administrative offices at 17 Glenwood Avenue, Raleigh, North Carolina
27603. Dina Porter leases store space comprised of approximately 4,251
square feet in the Cameron Village Shopping Center, Daniels Street,
Raleigh, North Carolina. The lease agreement for the premises is from a
five year period from October 1, 1995 to September 30, 2000. As rent, Dina
Porter presently pays the greater of (i) the base minimum monthly rent of
$4,989.33 or (ii) 6% of gross sales. In addition, Dina Porter pays its pro
rata share of ad valorem property taxes on the premises, its pro rata
portion of insurance and Cameron Village Merchants Association marketing
fund dues. The annual rent for the premises paid by Dina Porter from
October 1, 1995 through September 30, 2000 is as follows:
$54,355 for the year of October 1, 1995 through September 30, 1996
$56,194 for the year of October 1, 1996 through September 30, 1997
$58,033 for the year of October 1, 1997 through September 30, 1998
$59,872 for the year of October 1, 1998 through September 30, 1999
$61,711 for the year of October 1, 1999 through September 30, 2000
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
None.
- --------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
None.
- --------------------------------------------------------------------------------
16
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
(a) Market information.
There is no public trading market on which the Company's common stock
is traded. The Company has filed a Form 211 with the National Association
of Securities Dealers ("NASD") in order to allow the quotation of the
Company's Common Stock on the Over-the-Counter Bulletin Board ("Bulletin
Board"). The Company's 2,715,000 shares of Common Stock sold in April 1999
may trade on the Bulletin Board under the symbol "WOLF", if available. The
1,500,000 shares of Common Stock held by Peter Coker and Susan Coker can be
sold pursuant to Rule 144 ("Rule 144") under the Securities Act of 1933, as
amended, after satisfying all holding periods and other requirements
imposed by Rule 144. Peter and Susan Coker gifted an aggregate of 500,000
shares to three (3) persons in August 1999. The holding period of the
shares gifted by Susan and Peter Coker is attributable to the three (3)
recipients under Rule 144, however, the shares can only be sold pursuant to
Rule 144, after satisfying all holding periods and other requirements
imposed by Rule 144.
The 596,400 shares of the Common Stock that have been sold pursuant to
Rule 506 of Regulation D ("Rule 506"), may be sold pursuant to Rule 144
after satisfying all holding periods and other requirements imposed by Rule
144.
(b) Holders.
There are approximately ninety-eight (98) record holders of common
equity.
(c ) Dividends.
As of the date hereof, no cash dividends have been declared on the
Common Stock. Subject to the prior rights of any series of preferred stock
which may from time to time be outstanding, if any, holders of Common Stock
are entitled to receive ratably, dividends when, as, and if declared by the
Board of Directors out of funds legally available therefor. Under the DGCL,
the Company may only pay dividends out of capital and surplus, or out of
certain enumerated retained earnings, as those terms are defined in the
DGCL. The payment of dividends on its common stock is, therefore, subject
to the availability of capital and surplus or retained earnings as provided
in the DGCL.
(d) Recent sales of securities.
17
<PAGE>
On January 4, 1999, the Company and the Subsidiary entered into two
acquisition agreements, one with AAM (the "AAM Acquisition Agreement") and
the other with Dina Porter (the "Dina Porter Acquisition Agreement")
(collectively the Acquisition Agreements"). The terms of the Acquisition
Agreements are identical in most respects. Under the terms of the
Acquisition Agreements, the Company acquired all the issued and outstanding
stock of AAM from the shareholders of AAM, Peter L. Coker, Sr. and Susan H.
Coker, in exchange for 1,000,000 shares of the Common Stock of the
Company/(1)/, and acquired all the issued and outstanding shares of stock
of Dina Porter from its shareholder, Susan H. Coker in exchange for
1,000,000 shares of the Common Stock of the Company. The shares of Common
Stock issued to the shareholders of AAM and Dina Porter were issued
pursuant to an exemption from the registration requirements of the
Securities Act pursuant to Section 4(2).
In March 1999, the Company offered and sold 2,715,000 shares of its
common stock, at a price of $0.10 per share, aggregating $271,500, pursuant
to Rule 504 of Regulation D promulgated under the Act (the "Rule 504
Offering"). The Rule 504 Offering closed on April 6, 1999. As part of the
Rule 504 Offering, the Company issued to Kaplan Gottbetter & Levenson, LLP,
50,000 shares of the common stock as payment for legal services valued at
$5,000 or $.10 per share.
From June 1999 to September 30, 1999, the Company offered and sold
362,400 shares of its common stock, aggregating $36,240.00 to seventeen
(17) persons, three (3) of whom purchased shares of the Company's common
stock in the Rule 504 Offering. The shares of common stock were offered
and sold at a price of $.10 per share, pursuant to Rule 506. The sale of
these shares closed on September 30, 1999.
On October 15, 1999, the Company offered and sold an aggregate of
234,000 shares of its common stock, aggregating $34,350 to three (3)
persons, two (2) of who are prior shareholders of the Company. Of these
shares, 219,000 were offered and sold at a price of $.15 per share and
15,000 shares were offered and sold at a price of $.10 per shares. The
offer and sale of these shares was made pursuant to Rule 506.
All the persons who purchased shares of the Company's common stock
pursuant to Rule 506 are aware that the shares are restricted under the Act
and that the shares must be held indefinitely until the shares are
registered under the Act or an exemption from registration is available.
The Company has not raised more than an aggregate of $1,000,000 between all
the sales of shares sold pursuant to Rule 504 and Rule 506 and shares of
the common stock have not been sold to more than thirty-five (35) non-
accredited investors.
__________________________
/(1)/ Mr. And Mrs. Coker own these 500,000 shares of stock as tenants by
the entirety.
18
<PAGE>
- --------------------------------------------------------------------------------
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The Company was formed on March 16, 1998, under the laws of the State
of Delaware to engage in any lawful act or activity for which corporations
may be organized under the business corporation law of the State of
Delaware. The Company's principal assets consist of the assets of the
Company's subsidiary, Dina Porter, Inc. and the revenues it receives
through the sales of products through its one retail store. AAM is
currently inactive with no revenues or operating expenses.
For the next 12 months, the Company plans to expand the operations of
its two subsidiaries Dina Porter, Inc. and AAM. The expansion of the
business of Dina Porter, Inc. includes (i) obtaining new customers for the
sale of its retail products through its retail store by continuing its
marketing efforts through direct mail and plans to build Dina Porter's
retail merchandising business by opening additional stores in the same
geographic area and in other locations in North Carolina. (ii) enhancing
its sources for inventory, and (iii) pursuing and finding a management team
to continue the process of completing its marketing goals and to market
limited quantities of expanded lines of merchandise.
The Company's subsidiary, AAM, intends to act as a financial adviser
and provide investment advisory services to select companies who have
portfolios ranging in size from an ideal number of three to a practical
limit of 10 and have clearly defined investment objectives. At the moment,
Mr. Coker is the main employee of AAM and at is integral to everything at
AAM. However, AAM is going to devote considerable time and efforts to
recruiting highly-skilled and experienced individuals. Once recruited, AAM
will compensate such individuals and provide incentives to encourage them
to remain with AAM. AAM is not registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") due to the exemption from such registration for investment
advisers who have fewer than 15 clients in a twelve month period. The
Company intends to expand AAM's investment advisory business and will
register as an investment adviser under the Advisers Act, when it is
required to do so.
The Company anticipates that with the completion of its private
placement offering it will be in a position to complete its expansion
activities and expand its operations. The Company anticipates that its
results of operations may fluctuate for the foreseeable future due to
several factors, including whether and when new products are successfully
integrated and accepted by Dina Porter's present clientele and intended
targeted market for new stores, continued market acceptance of current
products, competitive pressures on pricing, changes in the mix of products
sold. Operating results would also be adversely affected by a downturn in
the market for current products. Because the Company is continuing to
increase
19
<PAGE>
its operating expenses for personnel and other general and administrative
expenses, the Company's operating results would be adversely affected if
its sales did not correspondingly increase. The Company's limited operating
history makes accurate prediction of future operating results difficult or
impossible. Although Dina Porter has experienced growth in recent years,
there can be no assurance that, in the future, the Company will sustain
revenue growth or remain profitable on a quarterly or annual basis or that
its growth will be consistent with predictions made by securities analysts.
The Company anticipates that its results of operations may fluctuate
for the foreseeable future for AAM due to several factors, including
whether and when new services and products are successfully integrated and
accepted by AAM's targeted market of potential clients, market acceptance
of initial and planned services and products, competitive pressures on
pricing, changes in the mix of products sold and services. Operating
results would also be adversely affected by a downturn in the market for
current products and services and volatility in the financial markets and
changes in the regulated environment. Because the Company is continuing to
increase its operating expenses for personnel and other general and
administrative expenses, the Company's operating results would be adversely
affected if its income did not correspondingly increase. The Company's
limited operating history makes accurate prediction of future operating
results difficult or impossible.
AAM is a development stage enterprise with no activity for the year
ended December 31, 1998 and 1999. During this period, management had
devoted the majority of its efforts to developing its marketing philosophy
and market strategy, obtaining new clients for its products, pursuing and
finding a management team to continue the process of completing its
marketing goals, obtain sufficient working capital through loans and equity
through private placement offering. These activities were funded by the
Company's management and investments from stockholders.
Dina Porter is an operating entity with business operation going back
to 1995 and with increased revenue for the year ended December 31, 1998 and
1999. During this period, management had devoted the majority of its
efforts to developing its marketing philosophy and market strategy,
obtaining new customers for its products, enhancing its sources for
inventory, pursuing and finding a management team to continue the process
of completing its marketing goals, market quantities of products, obtain
sufficient working capital through loans and equity through private
placement offering. These activities were funded by the Company's
management and investments from stockholders
Results of Operations
Results of operations for the year ended December 31, 1999 as compared
to the year ended December 31, 1998.
For the years ended December 31, 1998 and 1999, AAM was inactive.
20
<PAGE>
For the year ended December 31, 1999, the Company generated net sales
of $652,385 as compared to $672,619 for the year ended December 31, 1998
representing a decrease of $20,234 or approximately 3.0%. The Company's
cost of goods sold for the year ended December 31, 1999 was $393,582 or
60.3% of net sales as compared to $405,540 or 60.3% of net sales for the
year ended December 31, 1998. The Company's gross profit on sales was
$258,803 or 39.7% of sales for the year ended December 31, 1999 as compared
to $267,079 or 39.7% for the year ended December 31, 1998.
The Company's general and administrative costs aggregated
approximately $488,375, or 74.9% of net sales, for the year ended December
31, 1999 as compared to $251,938, 0r 37.5% of net sales, for the year ended
December 31, 1998 representing an increase of $236,437. This increase is a
result of expenses incurred by the parent, Wolfpack, in connection with the
acquisitions and stock offerings, and increased spending by the Dina
Porter operations for advertising, sales help and costs of handling credit
cards.
Liquidity and Capital Resources
The Company increased cash by $10,926 from a balance of $132,070 at
December 31, 1998 to $142,996 at December 31, 1999 through the process of
receiving net cash from the sale of shares of common stock aggregating
$306,617, which was mostly offset by net cash outflow from operations of
$295,691.
The Company expended $35,139 for a new vehicle for Dina Porter and a
capital withdrawal of $7,500 while Dina Porter was operating as a sole
proprietorship for the year ended December 31, 1998.
Management believes that it will be able to fund the Company by the
proceeds of the private placement offerings until the Company has developed
the business of AAM and is experiencing positive cash flows.
Thereafter, if cash generated from operations is insufficient to
satisfy the Company's working capital and capital expenditure requirements,
the Company may be required to sell additional equity or debt securities.
There can be no assurance that such financing, if required, will be
available on satisfactory terms, if at all.
Year 2000 Issues
The Company has completed its assessment of Year 2000 compliance with
respect to its products that are currently being sold to customers and has
concluded that all significant products are compliant. With respect to
third parties, the Company has identified and contacted its significant
suppliers to determine the extent to which the Company may be vulnerable to
such third parties' failure to address their own year 2000 issues. The
Company did not experience any material failures as a result of the change
to 2000. The
21
<PAGE>
Company, however, intends to continue to monitor its Year 2000 compliance
and Year 2000 compliance of its significant suppliers.
Based upon the Company's current estimates, additional out-of-pocket
costs associated with its Year 2000 compliance are expected to be
immaterial. Such costs do not include internal management time, which is
not expected to be material to the Company's results of operations or
financial condition. The Company believes that its most significant risk
with respect to Year 2000 issues relates to the performance and readiness
status of third parties. As with all manufacturing and wholesale companies,
a reasonable worst case Year 2000 scenario would be the result of failures
of third parties (including without limitation, governmental entities,
utilities and entities with which the Company has no direct involvement)
that negatively impact the Company's inventory supply chain or ability to
provide products to customers or the ability of customers to purchase
products, or events affecting regional, national or global economies
generally. The impact of these failures cannot be estimated at this time;
however, the Company continually reevaluates its contingency plans to
limit, to the extent practicable, the financial impact of these failures on
the Company's results of operations. Any such plans would necessarily be
limited to matters over which the Company can reasonably control.
Risk Factors
Risks or uncertainties that could be reasonably likely to have a
material adverse effect on the businesses of Dina Porter, AAM and the
Company and may thereby materially impact the Company's short-term or long-
term liquidity and/or net sales, revenues or income from continuing
operations are:
. as to Dina Porter: seasonality of sales and the continuation of
inventory from present and future vendors at prices that will permit
Dina Porter to operate at the current or improved gross profit levels;
and
. as to AAM: Federal securities regulations that may effect the ability
for AAM to complete its marketing strategy and a favorable environment
in which AAM will conduct its consulting activities.
The following is a detailed explanation of these trends, events, or
uncertainties.
Risks Factors Relating to AAM
Fluctuating Securities Volume and Prices. AAM (and the securities
industry in general) will be directly affected by national and
international economic and political conditions, broad trends in business
and finance, the level and volatility of interest rates, changes in and
uncertainty regarding tax laws and substantial fluctuations in the volume
and price levels of securities transactions. AAM (and the securities
industry in general) will be subject to other risks, including customer
fraud, employee errors or misconduct and
22
<PAGE>
litigation. In addition, price fluctuations may cause losses on securities
positions, which AAM recommends.
Competition from Securities Firms. AAM will encounter intense
competition in all aspects of its business and will compete directly with
many full services securities firms, a significant number of which offer
their customers a broader range of financial services including investment
advisory services, have substantially greater resources and may have
greater operating efficiencies. In addition, a number of firms offer
investment advisory services which are incidental to their other services
and do not charge any commission for this type of service. Moreover, there
is substantial commission discounting by full-service broker-dealers
competing for institutional and individual brokerage business. The possible
increase of this discounting could adversely affect AAM.
Competition from Banks. Other financial institutions, notably
commercial banks and savings and loan associations, offer customers some of
the services and products presently provided by investment advisers and
securities firms. In addition, certain large corporations and banks have
entered the securities industry by acquiring securities firms, which offer
investment advice. While it is not possible to predict the type and extent
of competitive services which banks and other institutions ultimately may
offer to customers, AAM may be adversely affected to the extent those
services are offered on a large scale.
Potential Litigation. Many aspects of AAM's business will involve
substantial risks of liability, including exposure to substantial liability
under federal and state securities laws in connection with the suitability
of the advice given to clients and the risk of liability arising out of the
activities of its employees. AAM may not be able to maintain an errors and
omissions insurance policy insuring it against these risks. In recent
years, there has been an increasing incidence of litigation involving the
securities industry, including class actions which generally seek
rescission and substantial damages.
Personnel. Most aspects of AAM's business will be dependent on
highly skilled and experienced individuals. AAM will devote considerable
efforts to recruiting and compensating those individuals and to providing
incentives to encourage them to remain with it. Individuals associated with
AAM may in the future leave it at any time to pursue other opportunities.
An inability of AAM to compete with other companies in the same type of
business as AAM in salary and benefits could have an adverse impact on
AAM's ability to attract and retain those personnel.
Regulation. AAM's business, the investment advisory industry and
securities industry generally, are subject to extensive regulation at both
the federal and state levels. Failure to comply with any of these laws,
rules or regulations could result in fines, suspension or expulsion, which
could have a material adverse effect upon the Company.
Risk Factors Relating to Dina Porter
23
<PAGE>
Sensitivity To Economic Conditions and Consumer Confidence. The
specialty retail industry is highly dependent upon the level of consumer
spending, particularly among affluent customers, and may be adversely
affected by an economic downturn, increases in consumer debt levels,
uncertainties regarding future economic prospects, or a decline in consumer
confidence. An economic downturn in the areas in which Dina Porter is
located, could have a material adverse effect on Dina Porter's business and
results of operations, and thereby effect the Company.
Changing Consumer Preferences. Dina Porter's success depends in
substantial part upon its ability to anticipate and respond to changing
consumer preferences and fashion trends in a timely manner. Although Dina
Porter attempts to stay abreast of emerging lifestyle and consumer
preferences affecting its merchandise, any failure by Dina Porter to
identify and respond to such trends could have a material adverse effect on
Dina Porter's business and results of operations.
Dependence on Designer Resources. Because Dina Porter offers high end
apparel, the Company's success is dependent in part upon initiating and
maintaining strong relationships with designers. The Company has no
guaranteed supply arrangements with its principal merchandising sources.
Accordingly, there can be no assurance that such sources will continue to
meet Dina Porter's quality, style and volume requirements. The inability of
Dina Porter to obtain quality and fashionable merchandise in a timely
fashion could have a material adverse effect on Dina Porter's business and
results of operations.
Seasonality; Fluctuation in Quarterly Results. The specialty retail
industry is seasonal in nature, with a disproportionately high level of
sales and earnings typically generated in the fall and holiday selling
seasons. Working capital requirements and inventory fluctuate during the
year, increasing substantially in the first quarter in anticipation of the
holiday selling season. If actual sales for a quarter do not meet or exceed
projected sales for that quarter, expenditures and inventory levels could
be disproportionately high for such quarter and Dina Porter's cash flow and
earnings for that quarter and future quarters could be adversely affected.
Competition. The specialty retail industry is highly competitive and
fragmented. Dina Porter competes with large specialty retailers,
traditional and better department stores, national apparel chains, designer
boutiques, individual specialty apparel stores and direct marketing firms.
Dina Porter competes for customers principally on the basis of quality,
assortment and presentation of merchandise, customer service, store
ambience, sales and marketing programs and value. Dina Porter competes for
quality merchandise and assortment principally based on relationships with
designer resources and purchasing power. Most of Dina Porter's competitors
are larger and have greater financial resources than the Company.
24
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements of the Company and supplementary data are
included beginning immediately following the signature page to this report.
See Item 13 for a list of the financial statements and financial statement
schedules included.
- --------------------------------------------------------------------------------
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
None.
25
<PAGE>
PART III
- --------------------------------------------------------------------------------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
(a) Executive Officers and Directors
The table below shows certain information about each of our officers and
directors.
Name Age Position
---- --- --------
Peter L. Coker, Sr. 56 Director, President and Treasurer
Susan H. Coker 56 Director and Secretary
Ira A. Hunt, Jr. 74 Director
The Directors and Executive Officers of the Company are as follows.
Directors of the Company serve for a term of one year or until their
successors are elected. Officers are appointed by, and serve at the
pleasure of, the Board.
Peter L. Coker, Sr., President, Treasurer and Director
Mr. Coker, age 56, has held the offices of President and Treasurer,
and has been a Director of the Company and Subsidiary since inception.
Mr. Coker has been a Partner and Senior Managing Director of Capital
Investment Partners, an investment banking firm located in Raleigh,
North Carolina since June of 1996. Since November of 1979, he has
also served as President, Director and shareholder of American Asset
Management, Inc., an investment advisory firm located in New York, New
York. Mr. Coker founded American Asset Management, Inc. in 1978. Mr.
Coker served as President and Assistant Secretary of AAM since it was
formed in February 1990 until June 1996. Mr. Coker currently acts as
a consultant to American Asset Management Inc. Mr. Coker is also a
Director of Dina Porter, Inc. Mr. Coker is currently a member of the
Board of Directors of the following companies: Leading Edge
Packaging, Inc. ("LEPI"), Remote Source Lighting International, Inc.,
Nations Page, Inc., Centennial Venture Partners, LLC, Persimmon IT,
Bear Rock Foods, Inc., and North Carolina State University Foundation.
Mr. Coker is also a member of the New York Society of Security
Analysts.
Susan H. Coker, Secretary and Director
Mrs. Coker, age 56, has held the office of Secretary and has been a
Director of the Company and Subsidiary since inception. Mrs. Coker has
been the President and a Director of Dina Porter, Inc. since it was
organized in May 1998. Since February 1990, Mrs. Coker has served as
Secretary and Treasurer and as sole Director of AAM. From September
1983 to January 1999, Mrs. Coker was the sole proprietor of Dina
Porter, a clothing and gift store,
26
<PAGE>
first in Pennsylvania and from 1995 to January 1999, in North
Carolina. Since May 1998, Mrs. Coker has held the office of President
and has served as a Director of Dina Porter, Inc.
Ira A. Hunt, Jr., Director
Mr. Hunt, age 74, has served as a director of the Company since
September 1, 1998. Mr. Hunt has been self-employed as a management
consultant since 1993. Mr. Hunt has served on the board of directors
of Data Measurement Corp., Information Resources Engineering, American
Multipleyer Corp., and Card Guard International, all public companies.
Mr. Hunt received a B.S. in 1945 from the U.S. Military Academy, an
MBA in 1958 from the University of Detroit, an MS in 1950 from the
Massachusetts Institute of Technology, a Doctor of Business
Administration in 1964 from George Washington University and a Doctor
of University in 1954 from the University of Grenoble, France.
(b) Significant Employees.
The participation of Peter L. Coker and Susan Coker in AAM and Dina
Porter, respectively is significant to the success of each of AAM and Dina
Porter as well as to the Company. The Company presently does not have an
employment agreement with either of Peter Coker and Susan Coker.
( c) Family relationships.
Peter L. Coker, Sr. and Susan H. Coker are married to each other.
(d) Compliance with Section 16(a) of the Exchange Act.
To the Company's knowledge, no officers, directors, beneficial owners
of more than ten percent of any class of the Company's equity securities
registered pursuant to Section 12 of the Exchange Act or any other person
subject to Section 16 of the Exchange Act with respect to the Company,
failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year, which ended December 31,
1999.
- --------------------------------------------------------------------------------
ITEM 10. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Executive Compensation
None of the Company, the Subsidiary, AAM nor Dina Porter have
commenced paying Susan Coker or Peter Coker any salary or fees.
27
<PAGE>
- --------------------------------------------------------------------------------
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
The following information relates to those persons known to the
Company to be the beneficial owner of more than five percent (5%) of the
Common Stock, par value $.001 per share, the only class of voting
securities of the Company outstanding as of April 12, 2000.
<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
- ----- ---------------- -------------------- ---------
<S> <C> <C> <C>
Common Stock, par Susan H. Coker 1,500,000 shares/(1)/ 28.24%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Peter L. Coker, Sr. 500,000 shares/(1)/ 9.41%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Johnson Y. Lee 470,000 shares 8.84%
value, $.001 per share 3004 Charlinda Street
West Covina, CA 91797 Direct
Common Stock, par Peter L. Coker, Jr. 425,000 shares 8.00%
value $.001 per share 361 Bukit Timah Road
Apartment 19-03 Direct
The Legend
Singapore
Common Stock, par Harold H. Reddick, Jr. 300,000 shares 5.64%
value, $.001 per share 1216 Hunting Ridge Road
Raleigh, NC 27615 Direct
Common Stock, par Johan Tellvick 300,000 shares 5.64%
value, $.001 per share 21 E. Blessings Garden
56 Conduit Road Direct Direct
Mid-levels
Hong Kong
</TABLE>
___________________________
* Based on 5,311,400 shares issued and outstanding.
/(1)/ Mr. and Mrs. Coker own 500,000 shares of stock as tenants by the entirety.
28
<PAGE>
(b) Security Ownership of Management.
The number of shares of Common Stock of the Company owned by the
Directors and Executive Officers of the Company as of February 1, 2000 is
as follows:
<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
- ----- ---------------- -------------------- -----------
<S> <C> <C> <C>
Common Stock, par Susan H. Coker 1,500,000 shares/(1)/ 28.24%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Peter L. Coker 500,000 shares/(1)/ 9.41%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Ira A. Hunt, Jr. 160,000 shares 3.01%
value $.001 per share 7102 Capitol View Drive
McLean, VA 22101 Direct
Common Stock, par All Officer and Directors as
value $.001 per share a Group (3 persons) 1,660,000 shares 31.25%
</TABLE>
_______________________
* Based on 5,311,400 shares issued and outstanding.
/(1)/ Mr. and Mrs. Coker own 500,000 shares of stock as tenants by the entirety.
_____________________
The Company has not contacted stock brokerage firms holding shares of
the Company's Common Stock in "street name" to determine whether there are
additional substantial shareholders of the Company.
- --------------------------------------------------------------------------------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
(a) Transactions where Key Company Members have a direct or indirect
material interest.
On January 4, 1999, the Company and the Subsidiary entered into the
AAM Acquisition Agreement and the Dina Porter Acquisition Agreement. The
terms of the Acquisition Agreements are identical in most respects. Under
the terms of the Acquisition Agreements, the Company acquired all the
issued and outstanding stock of AAM from the shareholders of AAM in
exchange for 1,000,000 shares of the Common Stock of the Company, and
acquired all the issued and outstanding shares of stock of Dina Porter from
its shareholders in exchange for 1,000,000 shares of the Common Stock of
the Company. The shares of Common Stock issued to the shareholders of AAM
and Dina Porter were issued pursuant to an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2).
29
<PAGE>
On August 23, 1999, the Company made a short term loan of $94,500,
with interest of 6% per year to its president, Peter L. Coker, Sr. Mr.
Coker repaid the loan in full with interest on October 14, 1999.
- --------------------------------------------------------------------------------
ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) The following documents are filed as part of this report.
<TABLE>
<CAPTION>
1. Financial Statements Page
----
<S> <C>
Report of Thomas P. Monahan, Independent Certified Public Accountant F-1
Balance Sheet as of December 31, 1999 F-2
Combined and Consolidated Statements of Operations for the years ended
December 31, 1999, and 1998 F-3
Combined and Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998 F-4
Combined and Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1999 and 1998 F-5
Notes to Financial Statements F-6
2. Financial Statement Schedules
All financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.
3. Exhibits
(a) The following exhibits are included as part of this report:
</TABLE>
Exhibit
Number Title of Document
- --------------------------------------------------------------------------------
2.1* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp. and
AAM Investment Council, Inc.
2.2* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp. and
Dina Porter, Inc.
30
<PAGE>
3.1* Certificate of Incorporation of Registrant
3.2* By-laws of Registrant
10.1* Material Contracts (Lease dated April 20, 1995 by and
between Dina Porter Gallery and York Properties, Inc.)
21 List of Subsidiaries of the Registrant
27 Financial Data Schedule (filed by EDGAR)
_______________
*Incorporated by reference to the registration statement on Form 10-SB
filed June 23, 1999.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
WOLFPACK CORPORATION
Dated: April 13, 2000 By: /s/ PETER L. COKER
--------------------------------------
Peter L. Coker,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 13/th/ day of April,
2000.
By: /s/ PETER L. COKER
--------------------------------------
Peter L. Coker
Director, President (principal executive
officer) and Treasurer (principal
financial officer)
By: /s/ SUSAN H. COKER
--------------------------------------
Susan H. Coker
Director and Secretary
By: /s/ IRA A. HUNT, JR.
--------------------------------------
Ira A. Hunt, Jr.
Director
32
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(973) 790-8775
Fax (973) 790-8845
To The Board of Directors and Shareholders
of Wolfpack Corporation and subsidiaries
I have audited the accompanying combined and consolidated balance sheet
of Wolfpack Corporation and subsidiaries as of December 31, 1999 and the related
combined and consolidated statements of operations, cash flows and shareholders'
equity for the year ended December 31, 1998 and 1999. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the combined and consolidated
financial position of Wolfpack Corporation and subsidiaries as of December 31,
1999 and the results of its combined and consolidated statements of operations,
shareholders equity and cash flows for the year ended December 31, 1998 and 1999
in conformity with generally accepted accounting principles.
/s/ Thomas Monahan
-------------------------
Thomas P. Monahan, CPA
March 31, 2000
Paterson, New Jersey
F-1
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
Assets
Current assets
Cash and cash equivalents $ 142,996
Inventory 119,714
Prepaid expenses
Officer loan receivable 50,375
---------
Current assets 313,085
Property and equipment-net 32,023
Other assets
Security deposits 5,500
---------
Total other assets 5,500
---------
Total assets $ 350,608
=========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 3,580
---------
3,580
Stockholders' equity
Preferred stock - authorized 5,000,000 shares, $.001 par value each.
At December 31, 1999, there are -0- shares outstanding.
Common stock authorized 20,000,000 shares, $.001 par value each. At
December 31, 1999, there are 5,311,400 shares outstanding. 5,311
Additional paid in capital 584,471
Retained earnings (242,754)
---------
Total stockholders' equity 347,028
---------
Total liabilities and stockholders' equity $ 350,608
=========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the For the
year ended year ended
December 31, December 31,
1998 1999
---- ----
<S> <C> <C>
Revenue $ 672,619 $ 652,385
Costs of goods sold 405,540 393,582
---------- ----------
Gross profit 267,079 258,803
Operations:
General and administrative 251,938 488,375
Non cash payment of legal fees 5,000
Depreciation 7,278 11,788
---------- ----------
Total expenses 259,216 505,163
Income (loss) from operations and before corporate income taxes 7,863 (246,360)
Other income
Interest income 3,013 3,532
---------- ----------
Total other income 3,013 3,532
Net income (loss) $ 10,876 $ (242,828)
========== ==========
Net income (loss) per share -basic $ 0.01 $ (0.07)
========== ==========
Number of shares outstanding-basic 2,000,000 3,597,200
========== ==========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the
year ended year ended
December 31, December 31,
1998 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 10,876 (242,828)
Non cash payments- legal fees
Depreciation 7,278 11,788
Adjustments to reconcile net income (loss) to net cash
Inventory 68,254 (59,347)
Prepaid expenses (23,910) 57,091
Officer loan receivable (50,375)
Accounts payable 10,790 (12,020)
-------- ---------
TOTAL CASH FLOWS FROM OPERATIONS 73,288 (295,691)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital contribution of undistributed profits of Dina Porter (a
sole proprietorship)
Capital withdrawal (7,500)
Purchase of assets (35,139)
--------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (42,635)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock 342,090
Offering expenses (35,473)
---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 306,617
NET INCREASE (DECREASE) IN CASH 30,653 10,926
CASH BALANCE BEGINNING OF PERIOD 101,417 132,070
-------- ---------
CASH BALANCE END OF PERIOD $132,070 $ 142,996
======== =========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Preferred Preferred Common Common additional Retained
Date stock stock stock paid in capital earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of
shares for
acquisitions -0- $ -0- 2,000,000 $2,000 $281,165 $ 283,165
Net income 74 74
--- --------- --------- ------ -------- --------- ---------
December 31, 1998 -0- $ -0- 2,000,000 $2,000 $281,165 $ 74 $ 283,239
=== ========= ========= ====== ======== ========= =========
Balances 01-04-1999 -0- $ -0- 2,000,000 $2,000 $281,165 $ 74 $ 283,239
Sale of shares 3,311,400 3,311 338,779 342,090
Offering expenses (35,473) (35,473)
Net loss (242,828) (242,828)
--- --------- --------- ------ -------- --------- ---------
December 31, 1999 -0- $ -0- 5,311,400 $5,311 $584,471 $(242,754) $ 347,028
=== ========= ========= ====== ======== ========= =========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 1 - Organization of Company and Issuance of Common Stock
a. Creation of the Company
Wolfpack Corporation (the "Company") was formed under the laws of
Delaware on March 16, 1998 and is authorized to issue 20,000,000 shares of
common stock, $0.001 par value each and 5,000,000 shares of preferred stock,
$0.001 par value each.
b. Description of the Company
The Company was formed as a holding company for the acquisition of Wolfpack
Subsidiary, Corp. which has two (2) subsidiaries Dina Porter, Inc. and AAM
Investment Council, Inc. Dina Porter, Inc. (Dina Porter) is a retail store which
specializes in contemporary clothing, jewelry and fine crafts. AAM Investment
Council, Inc. (AAM) was formed in on February 15, 1990 under the laws of
Pennsylvania by Peter Coker and Susan Coker. AAM is an investment adviser, that
offers portfolio management designed to achieve unique investment objectives.
c. Issuance of Shares of Common Stock
On January 4, 1999, the Company issued 1,000,000 shares of common stock
each to Susan Coker and Peter Coker in consideration for all of the issued and
outstanding shares of common stock of Wolfpack Subsidiary, Corp. and its
subsidiaries.
As of December 31, 1999, the Company offered and sold 3,311,400 shares of
common stock for an aggregate cash consideration of $342,090 or an average price
of $0.10 per share. The Company paid $40,473 as offering expenses consisting of
$35,473 in cash and the Company has issued 50,000 shares of common stock valued
at $0.10 per share in consideration for an offset of $5,000 in legal expense.
Note 2 - Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
On January 4, 1999, the Company entered into an agreement with AAM and Dina
Porter, pursuant to which the Company and these affiliated entities owned and
controlled by Peter and Susan Coker exchanged all the issued and outstanding
shares of common stock of these entities for 2,000,000 shares of the Company's
common stock. The combined and consolidated financial statements presented at
December 31, 1999, reflect the reorganization of the Company on January 4, 1999
which consists of the financial statements of the Company at December 31, 1999,
the balance sheet of AAM as of December 31, 1999 and the balance sheet of Dina
Porter, Inc. as of December 31, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for the Company for the year
ended December 31, 1999 and the statement of operations and cash flows of AAM
and Dina Porter, Inc. for the years ended December 31, 1998 and 1999. Dina
Porter was operated as a sole proprietorship for the year ended December 31,
1998 and was reorganized into a corporation on January 4, 1999 as Dina Porter,
Inc. for the purposes of this reorganization into the Company. The financial
statements include the balances of the Corporation and its subsidiaries after
elimination of material intercompany balances and transactions. All material
subsidiaries are wholly owned.
b. Cash and cash equivalents
Cash and Cash Equivalents - Temporary investments with a maturity of less
than three months when purchased are treated as cash.
c. Revenue recognition
Revenue is recognized at the point of sale for products sold over the
counter.
d. Selling and Marketing Costs
F-6
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Selling and Marketing - Certain selling and marketing costs are expensed in
the period in which the cost relates. Other selling and marketing costs are
expensed as incurred. Advertising costs that are deferred are expensed the first
time the advertising takes place.
For the years ending December 31, 1998 and 1999, advertising expenses was
$45,314, and $63,666 respectively.
e. Property and Equipment
Depreciation of property and equipment is computed using the straight-line
method over five years. Amortization of leasehold improvements is computed using
the straight-line method over the shorter of the estimated useful lives of the
assets or the remaining lease term.
Buildings 31 years
Furniture, Fixtures and Equipment 3 to 10 years
Leasehold improvements 5 years
f. Earnings per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share ("Statement No.
128"). Statement No. 128 applies to entities with publicly held common stock or
potential common stock and is effective for financial statements issued for
periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion
15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of
basic and diluted earnings per share by entities with complex capital
structures. Basic EPS includes no dilution and is computed by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution of securities that could
share in the earnings of the Company such as common stock which may be issuable
upon exercise of outstanding common stock options or the conversion of debt into
shares of common stock. As of December 31, 1999, there are no matters that would
effect the number of shares of common stock outstanding.
Shares used in calculating basic and diluted net income per share were as
follows:
December 31, December 31,
1998 1999
------------ ------------
Shares used in calculating per share
amounts - Basic (Weighted average
common shares outstanding) 2,000,000 3,597,200
g. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
h. Asset Impairment
The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undiscounted cash flows to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. Long-
lived assets and certain identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that
F-7
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
full recoverability is questionable. There was no effect of such adoption on the
Company's financial position or results of operations.
i. Significant Concentration of Credit Risk
At December 31, 1999, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0- which represents the excess of the deposit
liabilities reported by the banks over the amounts that would have been covered
by the federal insurance.
j. Recent Accounting Standards
Accounting for Derivative Instruments and Hedging Activities Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133) was issued in June 1998. It is effective for
all fiscal years beginning after June 15, 1999. The new standard requires
companies to record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the derivatives
and whether they qualify for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows. The Company does not
currently engage in derivative trading or hedging activity. The Company will
adopt SFAS 133 in the fiscal year ending December 31, 2000, although no impact
on operating results or financial position is expected.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March of 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met. SOP 98-1 is effective
beginning January 1, 1999. The Company is currently assessing the impact that
adoption of this statement will have on consolidated financial position and
results of operations.
Note 3 - Transfer of Assets
The Company was formed as a holding company for the acquisition of certain
assets and operating entities through its subsidiary Wolfpack Subsidiary Corp.
which has two subsidiaries Dina Porter, Inc. and AAM Investment Council, Inc.
The Company entered into an Agreement with Wolfpack Subsidiary Corp. on
January 4, 1999, pursuant to which the Company exchanged all the issued and
outstanding shares of common stock of Wolfpack Subsidiary, Corp. and its
subsidiaries for an aggregate of 2,000,000 shares of common stock of the
Company. The transaction has been accounted for as a transfer and is ccounted
for as if a pooling of interests had occurred using historic costs with the
recording of the net assets acquired at their historical book value with
restatement of periods prior to the reorganization on a combined basis.
Note 4 - Related Party transactions
a. Certain relationships
Susan Coker and Peter Coker are officers and directors of the Company,
Wolfpack Subsidiary, Corp., Dina Porter and AAM. Peter Coker and Susan Coker are
husband and wife.
b. Officer Compensation
No officer or employee has received in excess of $100,000 compensation as
of December 31, 1999.
c. Capital Withdrawal
F-8
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
For the year ended December 31, 1998, Susan Coker withdrew $7,500 cash from
the Dina Porter, reducing Dina Porter's capital while Dina Porter was operated
as a sole proprietorship.
Note 5 - Commitments and Contingencies
Lease Agreements
On June 26, 1995, the Susan H. Coker d/b/a/ Dina Porter entered into a
lease agreement for 4,251 square feet of retail space at The Cameron Village
Shopping Center at 446 Daniel Street, Raleigh, North Carolina with an unrelated
party for a period of 5 years beginning October 1, 1995 and ending September 30,
2000 for a rental of $4,530 per month. The lease requires a security deposit of
$4,530. The amount of rent to be paid over the life of the lease is as follows:
$58,033 per year October 1, 1997 through September 30, 1998.
$59,872 per year October 1, 1998 through September 30, 1999
$61,711 per year October 1, 1999 through September 30, 2000
The Company will pay its pro rata share of ad valorem property taxes on the
premises. This will be paid monthly in advance based on estimates of costs for
the year. The monthly amounts due for this space is $173.58 for property taxes
and $63.76 for insurance. These amounts will be adjusted once a year to reflect
the actual pro rata costs for the year.
AAM occupies office space at 17 Glenwood Avenue, Raleigh, North Carolina
27603.
Note 6 - Inventory
Inventories are stated at the lower of cost (first-in, first-out method)or
market, as determined by the retail inventory method.
At December 31, 1999, inventory of goods available for sale was $119,714.
Note 7 - Property and Equipment
Property and Equipment for the Company consisted of the following at
December 31, 1999:
<TABLE>
<CAPTION>
Accumulated
Asset Deprecation Balance
------- ----------- -------
<S> <C> <C> <C>
Vehicles $35,139 $12,048 $23,091
Furniture and fixtures 16,444 10,115 6,329
Leasehold Improvements 7,358 4,755 2,603
------- ------- -------
Total $58,941 $26,918 $32,023
</TABLE>
Note 8 - Income Taxes
Prior to January 4, 1999, the Company's subsidiary, Dina Porter reported
income and expenses as a sole proprietorship utilizing Form 1040 Schedule C and
reflecting any profit and loss as a component of reportable income of Susan
Coker on Form 1040. The Company's subsidiary AAM was inactive for the year
ending December 31, 1998.
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 1999, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carryforward and was fully offset by a
valuation allowance.
The Company's effective tax rate on tax benefits differs from the expected
federal tax rate as follows:
F-9
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Income tax benefit at statutory rate $ 99,663
Increase in valuation allowance $(99,663)
--------
Actual income taxes $ -0-
The Components of the deferred tax assets and
liabilities are as follows:
Net operating loss
available for carryforward $ 99,663
--------
Total deferred tax assets $ 99,663
Less valuation allowance $(99,663)
--------
Deferred tax assets,
net of valuation allowance $ -0-
At December 31, 1999, the Company has net operating loss carry forwards for
Federal income tax purposes of $293,128. This carryforward is available to
offset future taxable income, if any, and expires in the year 2010. The
Company's utilization of this carryforward against future taxable income may
become subject to an annual limitation due to a cumulative change in ownership
of the Company of more than 50 percent.
The Company recognized no income tax benefit for the loss generated for the
year ended December 31, 1999. SFAS No. 109 requires that a valuation allowance
be provided if it is more likely than not that some portion or all of a deferred
tax asset will not be realized. The Company's ability to realize benefit of its
deferred tax asset will depend on the generation of future taxable income.
Because the Company's subsidiary AAM has yet to recognize any revenue from
operations and Dina Porter will be expending greater amounts of cash to expand
operations, increase cash expended for advertising, labor, and other pre opening
expenses to open new stores, the Company believes that a full valuation
allowance should be provided.
Note 9 - Segment Information
Segment information for the Company is as follows:
On January 4, 1999, Dina Porter Gallery (a sole proprietorship) was
reorganized into a corporation Dina Porter, Inc. The transaction has been
accounted for as a transfer and is accounted for as if a pooling of interests
had occurred using historic costs with the recording of the net assets acquired
at their historical book value with restatement of periods prior to the
reorganization on a combined basis.
The consolidated balance sheet of the Company at December 31, 1999 consists of
the balance sheets of AAM as at December 31, 1999 and Dina Porter, Inc. as at
December 31, 1999 with the following components:
WOLFPACK CORPORATION
Consolidated Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
Wolfpack Dina Wolfpack
Corporation AAM Porter, Inc. Adjustments Corporation
<S> <C> <C> <C> <C>
Current assets
Cash $ 129,439 $ 1,936 $ 11,621 $142,996
Inventory 119,714 119,714
Officer loan receivable 50,375 50,375
</TABLE>
F-10
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
<S> <C> <C> <C> <C>
-------- ------- ----------- -----------
Total Current assets 179,814 1,936 131,335 313,085
Fixed assets 32,023 32,023
Other assets 5,500 5,500
-------- ------- ----------- -----------
Total assets $179,814 $ 1,936 $168,858 $350,608
======== ======= =========== ===========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 3,580 $ 3,580
----------- -----------
- -
Total liabilities 3,580 3,580
- - Stockholders' equity
- - Preferred stock
Common stock 3,311 1,000 1,000 5,311
- - Additional paid in
capital 303,306 860 280,305 584,471
- - Retained earnings (126,803) 76 (116,027) (242,754)
--------- ------- --------- -----------
- - Total stockholders'
equity 179,814 1,936 165,278 347,028
--------- ------- --------- -----------
- - Total liabilities and
stockholders' equity $ 179,814 $ 1,936 $ 168,858 $ 350,608
========= ======= ========= ===========
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Wolfpack Dina Wolfpack
Corporation AAM Porter, Inc. Adjustments Corporation
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ -0- $ -0- $ 652,385 $ 652,385
Costs of goods
sold -0- -0- 393,582 393,582
--------- ------ --------- -----------
Gross profit -0- -0- 258,803 258,803
Operations:
General and
administrative 152,806 -0- 335,569 488,375
Non cash payment
of legal fees 5,000 5,000
Depreciation -0- -0- 11,788 11,788
--------- ------ --------- -----------
Total expenses 157,806 -0- 347,357 505,163
Loss from
operations (157,806) -0- (88,554) (246,360)
Other income
Interest income 375 206 2,951 3,532
--------- ------ --------- -----------
Total other
income 375 206 2,951 3,532
</TABLE>
F-11
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
<S> <C> <C> <C> <C>
Net income
(loss)$ $(157,431) $ 206 $ (85,603) $(242,828)
========= ====== ========= ===========
</TABLE>
- --------------------------------------------------------------------------------
WOLFPACK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
December 31, 1998
<TABLE>
<CAPTION>
Wolfpack Dina Wolfpack
Corporation AAM Porter, Inc. Adjustments Corporation
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $-0- $ -0- $672,619 $672,619
Costs of goods
sold -0- -0- 405,540 405,540
---- -------- -------- -----------
Gross profit -0- -0- 267,079 267,079
Operations:
General and
administrative -0- -0- 251,938 251,938
Depreciation -0- -0- 7,278 7,278
---- -------- -------- -----------
Total expenses -0- -0- 259,216 259,216
Income (loss)
from operations -0- -0- 7,863 7,863
Other income
Interest income 37 2,976 3,013
---- -------- --------
Total other income 37 2,976 3,013
Net income
(loss)$ -0- $ 37 $ 10,839 $ 10,876
==== ======== ======== ===========
</TABLE>
F-12
<PAGE>
Exhibit Index:
Exhibit
Number Title of Document
- --------------------------------------------------------------------------------
2.1* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp. and AAM
Investment Council, Inc.
2.2* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp. and
Dina Porter, Inc.
3.1* Certificate of Incorporation of Registrant
3.2* By-laws of Registrant
10.1* Material Contracts (Lease dated April 20, 1995 by and between
Dina Porter Gallery and York Properties, Inc.)
21 List of Subsidiaries of the Registrant
27 Financial Data Schedule (filed by EDGAR)
_______________
* Incorporated by reference to the registration statement on Form 10-SB
filed June 23, 1999.
<PAGE>
EXHIBIT 21
Exhibit 21 - Subsidiaries Of The Registrant
The Registrant has three wholly-owned subsidiaries, Wolfpack Subsidiary Corp.
(which was organized under the laws of the State of Delaware on May 14, 1998),
AAM Investment Council, Inc. (which was organized under the laws of the State of
Pennsylvania on February 15, 1990) and Dina Porter, Inc. (which was organized
under the laws of the State of North Carolina on May 8, 1999).
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS INCLUDED IN
THE REGISTRANT'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 142,996
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 119,714
<CURRENT-ASSETS> 313,085
<PP&E> 58,941
<DEPRECIATION> 26,918
<TOTAL-ASSETS> 350,608
<CURRENT-LIABILITIES> 3,580
<BONDS> 0
0
0
<COMMON> 5,311
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 350,608
<SALES> 652,385
<TOTAL-REVENUES> 652,385
<CGS> 393,582
<TOTAL-COSTS> 505,163
<OTHER-EXPENSES> 3,532
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (242,828)
<INCOME-TAX> 0
<INCOME-CONTINUING> (242,828)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (242,828)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
